This fixes the problem. Diff between the old and new version:
--- /etc/gdm/custom.conf.orig 2008-01-02 21:06:43.000000000 +0100
+++ /etc/gdm/custom.conf 2008-01-02 21:07:31.000000000 +0100
@@ -268,7 +268,7 @@
ConfigAvailable=false
# Face browser is enabled. This only works currently for the
# standard greeter as it is not yet enabled in the graphical greeter.
-Browser=false
+Browser=true
# The default picture in the browser
#DefaultFace=/usr/share/pixmaps/nobody.png
# These are things excluded from the face browser, not from logging in
Is there an option in the GUI which sets this value ?